The Tasmanian Government has announced the ‘next major step’ in the overhaul of the State’s electricity industry with the creation of a new board to oversee the merger of Aurora Energy and Transend.

The new state-owned body is expected to commence operations by July next year, with the Government promising it will deliver $8 million in annual savings.

"Combining these businesses will create a more efficient and effective business and help deliver the lowest possible electricity prices for Tasmanians," Deputy Premier Bryan Green said.

Mr Green said the Government was immediately moving to recruit a chair for the proposed board, which will also include two directors from each of the two company’s boards.

"We want this to be a seamless transition for employees of the two businesses with the new board to determine the best operating model and ensure the business is fully operational by July 1 next year,” Mr Green said.

Mr Green said the Government was also on track to introduce full retail competition and choice for consumers from January next year.

"One of the Government's clear objectives is to ensure we have the lowest possible prices for households and small business.

"Tasmania is ahead of the game as other governments around Australia grapple with rising electricity costs and the growing demands on their energy infrastructure.